Poloniex Will Cover User Losses from the Flash Crash
Poloniex states in its official blog pots that he will be refunding the lost funds by paying for the trading fees back to June 6.
“Today, we are announcing another step in our roadmap to make whole the lenders who were impacted by the June 6, 2019 generalized losses in the BTC margin lending pool. We took the first step on June 14, when we distributed 180.73606744 BTC proportionally across impacted lenders (representing about 10% of the generalized losses).
Starting later in August, if you are an impacted lender, you will be credited your Poloniex trading fees until your losses are fully recovered. Every time you pay a trading fee, we will convert the fee to BTC and then credit you those fees each day. Your first credit will include all the trading fees you have paid since June 6, 2019. (You will see a repayment tracker in your account soon.)”-read the post.
On May 26, Poloinex’s Clam margin trading market went through a sudden crash. A coin from 2014 was credited by airdrop to Bitcoin, Litecoin, and Dogecoin holders, and Poloniex enabled margin trading on the coin until the flash crash liquidated 1,800 bitcoins approx. at $13.5 million at the time. Clam lost 77 percent of its value in just the first 45 minutes of the crash.
Poloniex then merged the lost coins with the funds from the exchange’s bitcoin margin lending pool. Because of they opted for this approach to cover the defaulted loans, 0.4 percent of Poloniex users suffered a loss of 16.2 percent of their funds which were kept in the pool.
The exchange pinned the blame on the flash crash, stating that it happened due to the fast rate of sell orders coupled with a general lack of liquidity within Clam margin trading. Poloniex also said that it was tracking the borrowers who failed to pay, but it is yet unknown what results they got from this.
Starting with June 14, Poloniex deposited into affected accounts 180 bitcoins across 10% of the users impacted by the crash. But crediting fees is allegedly not the only strategy the exchange will employ in refunding its users:
“Our work to make customers whole isn’t limited to our first payment or this new step of crediting trading fees. We are actively pursuing other strategies, and will update you when we can.”
Poloniex closed margin trading on BTS, CLAM, FCT, and MAID due to the extended damage of the crash.
Featured image: Stock Investor